Real business cycle theorists think that most business cycle fluctuations are caused by shocks to

A) the production function.
B) the size of the labor force.
C) the real quantity of government purchases.
D) the spending and saving decisions of consumers.


A

Economics

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Answer the following statement true (T) or false (F)

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If Crusoe and Friday want to maximize their consumption possibilities,

What will be an ideal response?

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Despite the fact that water is necessary to sustain life, it is less expensive than milk. Economic theory suggests that this is so because

A) there is a conspiracy among milk producers to hold prices artificially high. B) although the total utility of water consumption is high, its marginal utility per dollar spent is low when compared to milk. C) consumers are irrational. D) sellers of water hold the price of water artificially low because of its importance.

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